Federal Court of Australia

Patrick Stevedores Holdings Pty Limited v Construction, Forestry, Maritime, Mining and Energy Union (No 3) [2021] FCA 348

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 54A(3)(c) of the Federal Court of Australia Act 1976 (Cth), the Referee Report be rejected.

2.    Subject to further order, all of the parties involved in the Reference, that is, Patricks, Qube and the respondent parties, each pay one-third of the costs of the Reference, which is to be one-half of the amount invoiced by the Referee.

3.    Payment in accordance with Order 2 is to occur within 28 days of the date of these orders.

4.    The Referee has leave to apply for a variation of Order 2.

5.    The proceedings be set down for a final hearing commencing at 10.15am on 30 August 2021.

6.    The proceedings be listed for a case management hearing at 9.30am on 20 April 2021.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 54A(3)(c) of the Federal Court of Australia Act 1976 (Cth), the Referee Report be rejected.

2.    Subject to further order, all of the parties involved in the Reference, that is, Patricks, Qube and the respondent parties, each pay one-third of the costs of the Reference, which is to be one-half of the amount invoiced by the Referee.

3.    Payment in accordance with Order 2 is to occur within 28 days of the date of these orders.

4.    The Referee has leave to apply for a variation of Order 2.

5.    The proceedings be set down for a final hearing commencing at 10.15am on 30 August 2021.

6.    The proceedings be listed for a case management hearing at 9.30am on 20 April 2021.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(Revised from Transcript)

LEE J:

a    INTRODUCTION AND BACKGROUND

1    This is the third decision in the present proceedings.

2    The relevant facts are set out comprehensively in Patrick Stevedores Holdings Pty Ltd v Construction, Forestry, Maritime, Mining and Energy Union [2019] FCA 451; (2019) 286 IR 52 (Principal Judgment or J). These reasons assume a familiarity with the Principal Judgment and will adopt its abbreviations.

3    I found that contravening conduct was established for the reasons set out in the Principal Judgment. The two issues that then remained were: (1) the identification and quantification of any entitlement to statutory compensation; and (2) whether the Court should impose any pecuniary penalty.

4    I formed the view that it was appropriate that some aspects of the issue as to the entitlement to statutory compensation be referred to a referee for inquiry and report (Reference). It was common ground that the quantum of any penalty would need to take into account any payment of compensation, such that statutory compensation should be determined separately and before any issue as to penalties. On 31 July 2020, I delivered reasons for the decision to order a reference: see Patrick Stevedores Holdings Pty Limited v Construction, Forestry, Maritime, Mining and Energy Union (No 2) [2020] FCA 1093 (Reference Judgment or RJ).

5    On 12 August 2020, I made orders by consent referring both matters for inquiry and report to a referee, being a referee chosen by the parties (Referee). Importantly, as I made clear (at RJ[17] and [18]), expressly excluded from the Reference was a question that had been proposed by the parties in the following form:

Was this cost or value a loss suffered by Patrick Operations because of the Ban and/or the General Stoppage of Work?

6    I excluded this question because it raised the issue of legal causation, which I determined was to be a matter determined by the Court. What I was asking the Referee to address was issues relating to what is often described as factual causation, which would be a stepping stone by which I would then consider, following the proposed adoption of the referee report (Report), whether the Court should make an award of compensation, discretionary in nature, pursuant to s 545 of the Fair Work Act 2009 (Cth) (FWA).

7    The Referee Report was initially to be delivered by 21 October 2020, but the deadline was later extended to 19 November 2020. On 23 November 2020, I received a copy of the Report. By interlocutory application, the respondents applied for the whole of the Report to be adopted. By way of contrast, the applicants in the Patrick Proceeding sought to have the Report rejected by the Court, or in the alternative that certain of its paragraphs be rejected and that the Report be remitted to the Referee for further consideration and the preparation of a supplementary report. Patricks also sought leave to file an amended interlocutory application seeking the costs of the Report be assessed or an order that Patricks only be liable for 25% of the Referee’s costs.

8    Also by way of interlocutory application, the applicants in the Qube Proceeding sought to have certain paragraphs of the Report rejected, certain paragraphs accepted and a number “accepted as varied” in a proposed Schedule of their application. Qube also sought like orders (to those sought by Patricks) in relation to the costs of the Reference and Report. Both matters came back before the Court today for the hearing of all interlocutory applications.

9    In summary form, I have concluded in respect of the Report that:

(1)    the Referee has, with respect, gone beyond the questions and concepts that I asked him to address, being those related to factual causation. Moreover, in any event, the Referee has, with respect, misunderstood the legal principles applicable to causation in the context of s 545(2)(b) of the FWA, the scope of the questions and, more specifically, has blurred the line between factual and legal causation;

(2)    that misunderstanding has coloured the Referee’s report on the evidence before him;

(3)    the necessary result is the Report must be rejected in whole and consideration must then be given to whether the matter be referred again to the Referee for supplementary report or the reference process be concluded and the Court proceed to deal with all outstanding issues at the hearing, with such a hearing to be held as soon as practicable; and

(4)    in the circumstances, given my other findings as to the Report, the costs of the Report need to be adjusted and orders made for their payment.

A.1    The Referee Report

10    The Report is some 220 pages in length, and sets out the materials that inform the Report, the Court’s previous relevant findings, what the Referee considered to be the accepted legal approach to statutory compensation and findings of fact made by the Referee which are of relevance to the Reference.

11    In preparing the Referee Report and in accordance with the 12 August 2020 order and published reasons for decision in the proceedings, the Referee had regard to:

(1)    the “Evidentiary Materials”, which comprise the evidence relied upon by the applicants on the issue of statutory compensation already filed and served, and an affidavit of a Forensic Accountant, Ms Dawna Wright, filed by the respondents, which annexes Ms Wright’s expert report dated 29 November 2019 (Expert Report);

(2)    in the case of Patricks, evidence filed by the applicants in reply to the Expert Report, being a third statement of James Patrick Denham, dated 17 February 2020.

(3)    the “Pleadings”, comprising the documents respectively set out in the orders made on 12 August 2020 in each of the proceedings;

(4)    a view of the Terminal undertaken on 14 October 2020 with the assistance of an employee of Patricks who was not a witness in the proceedings, and without the parties’ legal representatives being present;

(5)    short statements from the parties providing answers to the questions posed by the questions the subject of the Reference; and

(6)    brief written submissions on the weight to be given to the Expert Report.

12    The Referee did not find it necessary nor appropriate to seek any additional information from any retained expert or other person as contemplated by Order 6 of the 12 August 2020 orders. This is a significant matter as the Referee has proceeded on the basis that he apparently would only have regard to the material identified above and not make any further inquiries, even though such inquiries might be considered by a fact finder to be relatively obvious.

13    In any event, the intention of identifying the evidentiary materials to which the Referee should have reference, but preventing Patricks and Qube “gap filling” by unilaterally providing additional information to the Referee, was not meant by me as to prevent the Referee from having access to such material as he considered necessary or appropriate in order to provide an answer to the questions posed.

B     PATRICKs’ AND QUBE’S CHALLENGES TO THE REFEREE REPORT

14    The power of the Court to determine how to proceed with a referee report after it has been “provided to the Court” is found in s 54A of the Federal Court of Australia Act 1976 (Cth) and r 28.67 of the Federal Court Rules 2011 (Cth) (FCR). That rule provides in relevant part as follows:

28.67    Proceeding on report

(1)    After a report has been given to the Court, a party may, on application, ask the Court to do any of the following:

(a)     adopt, vary or reject the report, in the whole or in part;

(b)    require an explanation by way of a further report by the referee;

(c)    remit on any ground, for further consideration by the referee, the whole or any part of the matter that was referred to the referee for inquiry and report;

(d)    decide any matter on the evidence taken before the referee, with or without additional evidence;

(e)    give judgment or make an order in relation to the proceeding or question.

…

15    It is not in dispute that the considerations relevant to the Court’s discretion as to whether or not to adopt a referee report are to be found in McDougall J’s collation of principles in Chocolate Factory Apartments Ltd v Westpoint Finance Pty Ltd [2005] NSWSC 784 (at [7]). Although often recited, it is necessary to repeat these principles in relevant part:

(4)     In so far as the subject matter of dissatisfaction with a report is a question of law, or the application of legal standards to established facts, a proper exercise of discretion requires the judge to consider and determine that matter afresh.

…

(6)     If the referee’s report reveals some error of principle, absence or excessive jurisdiction, patent misapprehension of the evidence or perversity or manifest unreasonableness in fact finding, that would ordinarily be a reason for rejection. In this context, patent misapprehension of the evidence refers to a lack of understanding of the evidence as distinct from the according to particular aspects of it different weight; and perversity or manifest unreasonableness mean a conclusion that no reasonable tribunal of fact could have reached. The test denoted by these phrases is more stringent than “unsafe and unsatisfactory”.

(7)     Generally, the referee’s findings of fact should not be re-agitated in the Court. The Court will not reconsider disputed questions of fact where there is factual material sufficient to entitle the referee to reach the conclusions he or she did, particularly where the disputed questions are in a technical area in which the referee enjoys an appropriate expertise. Thus, the Court will not ordinarily interfere with findings of fact by a referee where the referee has based his or her findings upon a choice between conflicting evidence.

…

(9)     The Court is entitled to consider the futility and cost of re-litigating an issue determined by the referee where the parties have had ample opportunity to place before the referee such evidence and submissions as they desire.

…

(13)     A question as to whether there was evidence on which the referee, without manifest unreasonableness, could have come to the decision to which he or she did come is not raised “by a mere suggestion of factual error such that, if it were made by a trial judge, an appeal judge would correct it”. The real question is far more limited: “to the situation where it is seriously and reasonably contended that the referee has reached a decision which no reasonable tribunal of fact could have reached; that is, a decision that any reasonable referee would have known was against the evidence and weight of evidence”.

(14)     Where, although the referee’s reasons on their face appear adequate, the party challenging the report contends that they are not adequate because there was very significant evidence against the referee’s findings with which the referee did not at all deal, examination of the evidence may be undertaken to show that the reasons were in fact inadequate because they omitted any reference to significant evidence.

(15)     Where the court decides that the reasons are flawed, either on their face or because they have been shown not to deal with important matters, the court has a choice. It may decline to adopt the report. Or it may itself look at the detail of the evidence to decide whether or not the expense of further proceedings before the referee (which would be the consequence of non adoption) is justified.

16    See also CPB Contractors Pty Limited v Celsus Pty Limited (formerly known as SA Health Partnership Nominees Pty Ltd) (No 2) [2018] FCA 2112; (2018) 268 FCR 590 (at 606 [67] per Lee J).

17    As noted above, although primarily Patricks sought to have the Report rejected, alternatively it sought that certain of its paragraphs be rejected and that it be remitted to the Referee for further consideration and preparation of a supplementary report. Qube sought to have certain of the Report’s paragraphs adopted, a number rejected and a number of the Referee’s conclusions be adopted “as varied”. Those proposed variations essentially removed any qualifications to the Referee’s findings as to causation and quantification of Qube’s loss, and would result in Qube recovering the amounts it claimed. Before going on, I should say something about this approach.

18    The reason why referees are able to be appointed in the exercise of federal jurisdiction is that, as I have previously explained in CPB Contractors, there is no delegation of judicial power to a person who does not hold Chapter III judicial office. The referee’s role does not involve the exercise of a cardinal aspect to the exercise of judicial power: the quelling of controversies by the finding of facts. What occurs is that an inquiry be made and a report given to the Court. It is upon the adoption of the report (in whole or in part) that the Court makes, either expressly or impliedly, findings of fact.

19    The adoption of a report is usually directed to adopting answers to questions formulated by the Court. By adopting the answer, the Court would have considered whether the referee’s report had shown some “error of principle, absence or excessive jurisdiction, patent misapprehension of the evidence or perversity or manifest unreasonableness in fact finding”: Chocolate Factory (at [7(6)] per McDougall J). In accordance with FCR 28.66, the written report of the referee sets out the referee’s opinion on the matter the subject of the reference and also sets out “the referee’s reasons for the opinion”: see FCR 28.66(c).

20    Ordinarily (and depending upon the form of an adoption order), the Court does not revisit the referee’s findings of fact where there was sufficient material to entitle the referee to make the relevant findings which underpin the reasons given. Accordingly, upon adoption of answers given by a referee to the questions posed by the Court, the specified facts set out in the report necessary for the referee to reach the answers given, are either expressly or implicitly found by the Court exercising federal judicial power.

21    It is not usual for findings by a referee to be adopted divorced from adopting an answer to a question given by the referee. Although I do not suggest that there would be no power to do so, it is difficult to understand why that would be a course that is appropriate given that it is only through the adoption of the answer to the inquiry posed by the referee that facts are found. If facts are stated in a report which do not logically then result in an answer to a question, it is difficult to see why, even leaving aside questions of power, it would be appropriate for those isolated facts to be adopted.

22    In any event, Patricks submits that the Report reveals “error of principle, patent misapprehension of the evidence; and/or failure to provide reasons for rejection of evidence not otherwise contested”. Patricks submits that the Referee relied upon the decision of Moore J in Qantas Airways Ltd v Transport Workers’ Union of Australia (No 2) [2011] FCA 816; (2011) 211 IR 119 (Qantas) for the principles to be applied, and the Report disclosed a misapplication of that decision. The Referee’s errors of principle in that respect “infected the entirety of the Referee Report”.

23    Qube submits that the Referee answered questions “outside the scope of the reference” by approaching the Reference on the basis that he was asked to determine statutory compensation rather than the specific questions put to him. In doing so, the Referee committed “errors of principle”. In particular, the manner in which the Referee determined factual causation was erroneous, namely, the Referee erroneously proceeded on the basis that questions of whether “Qube incurred a cost or suffered a loss because of the Contraventions are to be determined by asking whether Qube has been able to demonstrate that they were caused solely by the Contraventions and that no judgment or assessment can be made by the Referee (or Court) about the extent to which the Contraventions contributed to a particular cost or loss.” In Qube’s submission, this would impermissibly shift the onus onto the complainant to prove that there were no other possible contributing factors to the loss claimed. Qube also argues that the Referee “ignored or overlooked … direct and unchallenged evidence called by Qube”. For reasons that will become obvious, it is unnecessary to deal with this latter contention.

24    As will become evident, there is considerable force in Patricks’ and Qube’s submissions as to flaws in the Referee’s approach to the questions posed to him for resolution.

C     the correct approach to statutory compensation

25    The power of the Court to award statutory compensation is found in s 545(2)(b) of the FWA. Section 545 appears, relevantly, as follows:

545    Orders that can be made by particular courts

Federal Court and Federal Circuit Court

(1)    The Federal Court or the Federal Circuit Court may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.

(2)    Without limiting subsection (1), orders the Federal Court or Federal Circuit Court may make include the following:

…

(b)    an order awarding compensation for loss that a person has suffered because of the contravention;

…

26    For his understanding of the Court’s task (and by extension his task as it related to factual causation and quantification), the Referee relied on the decision of Moore J in Qantas as what he considered to be the “well accepted” approach to the question of statutory compensation. Although Moore J’s substantive decision was overturned on appeal, his Honour’s observations as to the correct approach to statutory compensation were not the subject of challenge on appeal nor any adverse comment in the appeal judgment: Transport Workers Union of Australia v Qantas Airways Ltd [2012] FCAFC 10; (2012) 199 FCR 190. The Full Court noted, however, that the words in s 494(5) of the Workplace Relations Act 1996 (Cth) (a predecessor to s 545 of the FWA) were of “wide import” (at 192 [4] per Gray) and the “grant of power in s 494(5) was a very wide one” (at 202 [52] per Buchanan and McKerracher JJ).

27    A differently constituted Full Court of this Court more recently endorsed Moore J’s approach in Qantas: see Fair Work Ombudsman v Construction, Forestry, Maritime, Mining and Energy Union (the Hutchison Ports Appeal) [2019] FCAFC 69. Justice Ross there observed (at [148]–[149]):

[148]    I also reject the proposition that the primary Judge placed a “gloss” on Qantas and that her Honour’s reliance upon that judgment was misplaced. Rather, it is the FWO who has misconceived the import of Qantas. Nothing Moore J said in Qantas supports the FWO’s contention regarding the limitations as to the matters the Court may take into account in determining whether it is appropriate to grant a compensation order. Moore J said about an equivalent provision (s 494(5)(b) of the Workplace Relations Act 1996):

[9]    However, I should observe at this stage that the nature of the discretion to order the payment of a sum to remedy the effects of industrial action is not, in my opinion, exercisable by reference to general considerations of fairness. It is a power conferred for a specific purpose as part of a statutory scheme which made certain conduct unlawful. Whether this proscription of conduct is, in some broad sense, fair, desirable or appropriate is not a matter for me to assess. Also whether engaging in proscribed conduct might, in any given situation, be reasonable or justifiable on broad grounds concerning fairness or “industrial justice” is again not a matter for me to assess. Once it is accepted that the purpose of the conferral of the power to make an order to remedy the effects of industrial action is to address the consequences of unlawful industrial action then the exercise of the discretion both to make an order and to determine the terms on which it is made, is limited.

[10]    It would be undesirable for me to endeavour to catalogue in a comprehensive way, considerations which might inform the exercise of the discretion. However, I can deal with those that appear to me as possibly arising in the present case. First, an application needs to be made for an order, at least in the ordinary course. Qantas need not have, but has, made such an application. Another employer in similar circumstances might conclude that, on balance, it was preferable not to risk alienating or antagonizing its workforce, and the union and its officers representing them, by seeking an order for payment of money from union funds. However, Qantas has a legal right to seek an order and it has exercised that right. It is entitled to do so.

[11]    Another consideration would be whether the application for the order was bona fide. By that I mean the order was not being sought for an ulterior purpose. There has been no suggestion in the evidence or in the submissions that Qantas has sought the order, not simply to secure payment to compensate it for losses suffered, but rather to secure some advantage in future workplace negotiations with the TWU and its members which Qantas employs. Such negotiations are, I assume, imminent as EBA 7 nominally expired on 1 July 2011. Had there been such an ulterior purpose, I would not make the order I propose to make.

[12]    Another consideration would be whether the effect of the industrial action was occasioned, in whole or in part, by the unreasonable conduct of the party seeking the order and, in particular, unreasonable conduct in response to the industrial action. In the present case the respondents submitted it was. They pointed to Qantas acting at SIT, Brisbane, Adelaide and Perth on the basis that it was obliged not to pay the TWU members who had engaged in some form of industrial action four hours pay. This, the respondents pointed out, was not the approach Qantas adopted at SDT where some industrial action was effectively sanctioned by local management, the employees told their pay would not be docked and they returned to work. I must acknowledge the difference in approach. However, the response at SIT, Brisbane, Adelaide and Perth was not the unreasonable one, in the circumstances. On one view of s 507 (but not, in my opinion, the correct view) the employer has no capacity to agree or approve of industrial action after it has taken place. On that view Qantas was obliged to take the approach it did. Also it was not unreasonable to inform the TWU membership of the consequences for them of what they had done. I would not infer that Qantas’ response (even though one of the principal architects of the response, Brad Moore, was not called) was anything other than a genuine response to events as they unfolded, based on the legal effect of s 507 as understood by Moore and others. (Emphasis added)

[149]    It is plain from the highlighted passages that the observations of Moore J in Qantas are consistent with the views expressed by the primary Judge. Moore J’s statement (at [9] in the extracted passage) that the discretion is not exercisable by reference to general considerations of fairness means no more than that an order under s 545 is directed at compensating a person for loss suffered because of the contravention. It is not a power to grant a remedy at large based simply on general considerations of fairness. But such an observation does not imply that the factors to be taken into account in determining whether it is appropriate to grant an order must be confined to the remedial purpose of the order. So much is clear from the balance of Moore J’s judgment.

28    From the above, it seems clear from both the words of the statute and the authorities that the Court’s discretion to award compensation under s 545(2)(b) is a wide discretion that, although not referable to general considerations of “fairness”, is not confined to relief only being appropriate when granted in strict observation of the remedial purpose of the power. That view is bolstered by the fact that s 545 “allows for compensation which may not fully compensate a person for the loss suffered”: Dalfallah v Fair Work Commission [2014] FCA 328; (2014) 225 FCR 559 (at 596 [157] per Mortimer J).

C.1    Causation

29    It is paramount that for compensation to be awarded under s 545, the Court must be satisfied that there exists the appropriate causal connection between the contravention and the loss claimed: Australian Licenced Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd [2011] FCA 333; (2011) 193 FCR 526 (at [423] 592 per Barker J). The appropriate compensation to be awarded under s 545 is limited to the loss caused by the contravention and the burden is on the claimant to prove its loss.

30    Determining whether there is a causal connection involves “not an examination of what did happen, but an assessment of what would or might have occurred, but which could no longer occur (because of the contraventions)”: Maritime Union of Australia v Fair Work Ombudsman [2015] FCAFC 120 (at [28] per Allsop, Mansfield and Siopis JJ). In other words, it might be said it involves (as with causation inquiries in other areas of the law) consideration of the counterfactual. With reference to s 545(2)(b) of the FWA, the Full Court (at [30]) reasoned that “[w]hat such damage or loss is (in the present context) that must be proved on the balance of probability will be governed by an understanding of the statute” and the Court referenced the “protective purpose” of provisions such as s 346 of the FWA:

What such damage or loss is (in the present context) that must be proved on the balance of probability will be governed by an understanding of the statute. Given the evident protective purpose of provisions such as s 792 of the WR Act and s 346 of the FW Act, there would be no sensible statutory purpose in denying a proposition that the damage or loss in relation to prospective employment can be constituted by the loss of an opportunity or chance to be considered for employment as a result of, or because of, the contravention (which then has to be given a value to inform the order for compensation); and there would be no sensible statutory purpose in limiting the compensation to damage or loss proved by reference to the proof of events that would, on the balance of probability, have or have not occurred. Thus, if the relevant contravention by a party has prejudiced a person in prospective employment, it would conform entirely with the statutory purpose to identify the damage or loss by reference to, indeed as, that prejudice. Depending on the circumstances, such prejudice may best be seen as the loss of the chance or opportunity of particular employment. That certainly was the relevant prejudice here, and it can be seen to have been proved on the balance of probability – indeed, to the point of demonstration.

31    Context is important. Notwithstanding this, it is useful to consider the question of causation in the FWA in a way that involves at least some appreciation of how causation operates within the law generally, and also in the context of statutory compensation for breaches of other norms of conduct. In this regard, it is noteworthy that the satisfactory approach to the issue of causation has proved to be one of the most troublesome issues to have vexed the High Court in recent decades.

32    It might be said that through a long process the High Court has embraced the observation of Mahoney JA in Barnes v Hay (1988) 12 NSWLR 337 (at 353), taken up by McHugh J in Henville v Walker [2001] HCA 52; (2001) 206 CLR 459 (at 491 [98]) and repeated by Kirby J in Travel Compensation Fund v Tambree [2005] HCA 69; (2005) 224 CLR 627 (at 647 [60]), that the determination of causation is a “normative decision” which involves a “functional evaluation of the relationship and the purposes and policy of the relevant part of the law”.

33    In the context of s 82 of the Trade Practices Act 1974 (Cth) (TPA), in I & L Securities Pty Limited v HTW Valuers [2002] HCA 41; (2002) 210 CLR 109, Gleeson CJ said (at 119 [26]):

The relationship between conduct of a person that is in contravention of the statute, and loss or damage suffered, expressed in the word ‘by’, is one of legal responsibility. Such responsibility is vindicated by an award of damages. When a court assesses an amount of loss or damage for the purpose of making an order under s 82, it is not merely engaged in the factual, or historical, exercise of explaining, and calculating the financial consequences of, a sequence of events, of which the contravention forms part. It is attributing legal responsibility; blame. This is not done in a conceptual vacuum. It is done in order to give effect to a statute with a discernible purpose; and that purpose provides a guide as to the requirements of justice and equity in the case. Those requirements are not determined by a visceral response on the part of the judge assessing damages, but by the judge’s concept of principle and of the statutory purpose.

34    In summary, and at some risk of oversimplification, the more recent pronouncements of the High Court on causation in a statutory context emphasise that:

(1)    the answer to a question of causation may differ according to the purpose for which the question is asked: Travel Compensation Fund (642 [45] per Gummow and Hayne JJ);

(2)    the attempted application of “common sense” alone is of little utility: Allianz Australia Insurance Ltd v GSF Australia Pty Ltd [2005] HCA 26; (2005) 221 CLR 568 (at 596–8 [96]–[100] per Gummow, Hayne and Heydon JJ); Travel Compensation Fund (at 645 [45] and 646–7 [58] per Kirby J);

(3)    the application of a “but for” test has an important role as a negative criterion (in that it will usually exclude causation if not satisfied), but is inadequate as a comprehensive positive test: Travel Compensation Fund (at 638 [25] per Gleeson CJ), citing Medlin v State Government Insurance Commission (1995) 182 CLR 1 (at 6 per Deane, Dawson, Toohey and Gaudron JJ); Marks v GIO Australia Holdings Ltd [1998] HCA 69; (1998) 196 CLR 494 (at 512–3 [42] per McHugh, Hayne and Callinan JJ);

(4)    the application of tests of causation at common law can provide a useful analogy but cannot confine the statute: Marks v GIO Australia Holdings (at 512 [41] and 529 [103] per Gummow J); Murphy v Overton Investments Pty Limited [2004] HCA 3; (2004) 216 CLR 388 (at 407 [44] per Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ); and

(5)    factors relevant to the existence of causation in the relevant statutory sense will include:

(a)    the purpose of the particular cause of action;

(b)    the nature and scope of the defendant’s obligation in particular circumstances: Allianz Australia Insurance Ltd (at 596–8 [96]–[100] per Gummow, Hayne and Heydon JJ); Travel Compensation Fund (at 645 [45] per Kirby J).

35    I fail to see why, on the issue of causation, this reasoning which developed as applicable to other statutory schemes that provide for compensation for breach of civil remedy provisions would not be applicable in the context of s 545(2)(b) of the FWA. Granted, a given passage in a statute must be construed by reference to the context in which the particular phrase appears and read in a manner which gives effect to its presumed legislative object and purpose: see Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 (at 381 [69] per McHugh, Gummow, Kirby and Hayne JJ). But the words “because of” (and other like formulations of a test for causation) have a well-established meaning in the context of principles of statutory compensation generally, and like wording is used elsewhere.

36    Provisions that employ like wording in other statutory schemes include (for example) sections 236, 237 and 238 of the Australian Consumer Law (ACL) and s 12GBB(5) of the Australian Securities and Investments Commission Act 2001 (Cth). There is no need to go further into these general principles of causation, save merely to note that even if the Referee had to form a view concerning legal causation for the purposes of answering the questions posed in relation to factual causation, the approach adopted of needing to prove some sort of sole, proximate prevailing or substantial cause in order to establish the necessary causal connection is, with respect, misconceived. In this regard, it is well to remember the comments of Gaudron, Gummow and Hayne JJ in I & L Securities (at 127–8 [55]–[56]):

If there is a contravention of the Act and, following that contravention, a person suffers loss or damage, it may be possible to identify several features of the history of events as having contributed to the person suffering loss. To take the simple example of a person who suffers loss or damage following a person making a misleading or deceptive statement, the loss may be said to have been caused by the combined effect of the making of the statement and the reliance on it by the person who suffers loss. Sometimes it will be open to say that the person who relied on the statement was foolish to do so or, at least, did not take reasonable care to protect his or her own interests. Similarly, to take a further example, if there is a contravention of s 46 of the Act by a corporation having a substantial degree of market power deterring a person from engaging in competitive conduct in that market, it may, in some circumstances, be open to say that the person deterred could, or even should reasonably, have made some competitive response different from the response it did. In those cases it may well be that the loss or damage which has been suffered would not have been suffered but for each of the persons who suffered loss acting, or omitting to act, as they did.

There may be many acts or omissions that could be said to have contributed to the happening of an event. As has often been mentioned in learned articles on the subject of causation, the decision of a tortfeasor's great-great grandmother to have children can be identified as one factual cause for an event which is the subject of litigation. To search for the single cause of an event is, therefore, to pursue an illusion. And, much more often than not, to speak of the “effective cause” or the “proximate cause” (or to use some similar expression) is to hide important assumptions that are made, or conclusions that are reached, about the attribution of responsibility for particular kinds of act or omission. That is why it is necessary to understand the purpose for making some inquiry about causation. Only when the purpose of the inquiry is known is it possible to identify and articulate how and why some circumstances are extracted “out of the whole complex of antecedent conditions of an event'” and identified by the law as a cause of it.

37    Of course, this is why it is trite law that the question presented by s 82 of the TPA and cognate provisions is not an inquiry as to what the sole cause of the loss and damage alleged was; it is enough to demonstrate that the contravention of a relevant provision of the Act was a cause of the loss and damage sustained. Of course, a provision such as s 545 is better contrasted with s 87 of the TPA and similar provisions, rather than s 82. It relates to a range of possible orders that can be made by the Court, including orders relating to compensation, and involves, by the use of the word “may”, a discretion: see s 33(2A) of the Acts Interpretation Act 1901 (Cth). Authorities in the industrial area have developed an approach to the quantification which, given the purposes of the statute, sets out the way in which that discretion is said to be exercised. There is no need, for present purposes, to dwell further on these matters.

C.2    The “Questions for the Court”

38    In his Report, the Referee set out a number of “Questions for the Court” concerning statutory compensation, in respect of which he provided his view as to the answers. Provision was made in the orders referring the matter for inquiry and Report for the Referee to “submit any question arising on the Reference for the decision of the Court and provide alternative opinions on the Relevant Questions which depend upon how the Court determines any question submitted …”. This is a very common order made in the context of references, allowing for alternative views to be expressed, depending upon the ultimate view the Court takes as to a legal question.

39    The Questions as framed by the Referee (at [47]–[53] of the Report) were as follows (noting that there was no “Question 4”):

47.    Question 1: What is the Court required or empowered to do in circumstances where it is apparent there are a number of causes that are likely to have contributed to a claimed loss or cost (and which has been quantified into a specific amount), with Industrial Action being but one of them?

…

48.    Question 2: Does the claim fail completely because the Applicant bears the onus of proving that every amount claimed, was caused by the Industrial Action and it has simply failed to do so?

…

49.    Question 3: When there is not an evidentiary basis for determining the extent of the contribution of each cause as a matter of fact, then:

(a)    Does the claim fail even if it appears, as a matter of general impression, that the Industrial Action may well have been the major or, at least, a substantial contributing causal factor; OR

(b)    Is the Court empowered to order a lesser sum by way of compensation than that claimed, by a process of discounting to allow for the likely or possible contribution of the other factors in causing the loss and damage, with the level of any such discount or allowance being set purely as a matter of discretion, on a general evaluative basis?

    …

50.    Question 5: It has been accepted that, even if the Industrial Action is shown to be the sole cause of the loss and damage incurred and the cost of the losses has been assessed and the specific sum sought accepted, that amount can nevertheless be discounted, as a matter of discretion (i.e. to reduce the sum to an "appropriate" one) due to the ‘contribution’ of conduct of the applicant e.g. in a ‘failure to mitigate' sense and noting, it seems, that even provocative conduct by the employer, causing either the initiation, the extent and/or continuation of the Industrial Action, is also considered as being relevant. Accordingly, does this suggest that the answer to the last question is:

(i)    option (b) above; or

(ii)    is the Court’s ability to consider imposing a discount to account for other relevant factors, only applicable when the Court has already determined the monetary sum that has been proved by the applicant i.e. confined to make adjustments only to ensure that the order made is an ‘appropriate’ one.

…

51.    Question 6: In other words, is the capacity to discount a sum claimed (i.e to refuse to award the full sum claimed) because of the causal contribution of factors other than from the Industrial Action, inconsistent with the requirement for proof of a direct causative link between that Industrial Action and the sum claimed and the fact that, while the discretion is broad, it is not capable of being exercised on the basis of fairness.

…

52.    Question 7: Is it a prerequisite to an award of compensation in this context, that any sum(s) claimed are shown to be for loss or damage actually incurred e.g. revenue (or profits) actually lost and expenses actually incurred, as the scope of s.545(2)(b) is to deliver a payment made by way of reimbursement and/or one consistent with the overarching compensatory principle of restitution;

…

53.    Question 8: Can an order for compensation be made with respect to claims for what are, in effect, “notional” costs i.e. claims based on the assertion that, but for the Industrial Action, notional “savings” would, (or might) otherwise, have been achieved then e.g. whilst the wages bill would have been the same, nevertheless higher levels of productivity/efficiency could have been achieved (e.g. more widgets would have come of the production line each day) , OR is even establishing such matters, not sufficient in itself to ground an order under s.545(2)(b), unless it also can be shown to have resulted in actual costs being incurred or revenue actually lost

(Footnotes omitted and without alteration).

40    Although termed as “Questions for the Court”, the views of the Referee on these questions of legal principle have, regrettably, coloured the Referee’s findings as to factual causation and quantification of loss. With respect, as I have already explained, I disagree with the Referee’s view on a number of the Questions, with the result that the process of the Referee answering the questions the subject of the Reference has miscarried. To illustrate this point it is only necessary to examine the first three of the Questions, the Referee’s responses and how those responses affected the Report.

Question 1: A number of causes?

41    The Referee’s answer to Question 1 was that if the “Applicant is unable to identify with clarity the loss incurred by the specific contravention, then this seems to mean that the ‘appropriate causal connection has not been established’” and that the applicant has not discharged the onus required under s 545(2)(b). The proposition that “there must be proved, on the balance of probabilities, to have been some ‘damage suffered … as a result of the contravention’ and some ‘loss … suffered because of the contravention’” is not controversial: Maritime Union v FWO (at [29] per Allsop, Mansfield and Siopis JJ). However, that response does not specifically answer Question 1, which is a question directed to a context where presumably some loss can be identified and proved to the requisite standard, but there may be several causes. The Report itself appears to provide the Referee’s answer to that admittedly more useful question. The answer manifests in the Referee’s consistent references to alternate factors that could have caused the applicants’ claimed losses.

42    The Report is replete with references to what the Referee terms “Business Operation Factors” and “Other Factors”. Those factors, in the Referee’s view, are ever apparent obstacles to Patricks and Qube making out causation. The former factors relate to the nature of the usual operation of Patricks’ and Qube’s businesses and (so the Referee would have it) those factors go some way to causing dips in revenue and increases in costs incurred by their businesses. The latter factor includes, amongst other things, the fact that Qube had subleased a new container park and had commenced moving its containers there, such that its empty containers were being trucked to the Patrick Terminal as opposed to being transported by train to the old container park (although Qube had resolved to recommence using the old container park because of the impact of the contravening conduct). There was also a planned “track possession” by ARTC from 22 to 24 April 2017 that stopped all rail movements in and out of the Patrick Terminal. On the Referee’s view, it is difficult to discern whether some of the losses allegedly attributed to the contraventions would not have otherwise occurred by reason of the “Business Operation Factors” and “Other Factors”.

43    Any alternate factors that may have contributed to a particular loss claimed by Patricks and Qube to be caused by the contraventions are not to the point, unless they show that the complainant’s loss was not caused by the defendant’s contravention: cf I & L Securities (at 128 [56] per Gaudron, Gummow and Hayne JJ). The only question to be asked for the purposes of s 545 of the FWA is whether the loss claimed was incurred because of the contravention. Any test that requires that the contravention be the sole cause or the only cause, for reasons I have already explained, is to be rejected. It is also plain that in any commercial context there will be a number of factors that affect business operations and can cause fluctuations in revenue, but these broader factors cannot be deployed to defeat any claim for compensation for loss caused by the contraventions. Unsurprisingly, the applicants in both proceedings have not, in the Referee’s view, been able to meet the high bar and effective requirement that their contraventions be the “sole cause” or “substantial cause” of any loss claimed.

Question 2:     Does the claim fail if not all of the loss claimed can be proved to have been caused by the contraventions?

44    The Referee’s view on this point was that the claim would fail if the applicants were unable to prove all of the loss claimed. That is because, he reasoned, the wording in s 545(2)(b) is such that the “loss is intimately tied to the contravention itself” and it would be difficult to then ascertain whether the loss claimed is “because of the contravention” as required by the section. That proposition is at odds with the established principle that the discretion to award statutory compensation under s 545(2)(b) is “very wide”, and that it “allows for compensation which may not fully compensate a person for the loss suffered”: Dalfallah (at 596 [157] per Mortimer J). Consistent with the authorities, the Court must be able to award a lesser amount of compensation if only a fraction of the loss claimed can be proved on the balance of probabilities to have been suffered because of the contravention.

45    Attractive as it may be in the interests of efficiency to force applicants into better forensic choices, the Referee’s “all or nothing” approach on this point is misconceived. If only some of the loss can be proved on the balance of probabilities to have been caused by the loss, consistent with the Court’s wide discretion under s 545(2)(b), the Court is empowered to compensate the applicant for so much of the loss that can be proved as caused by the contravention.

Question 3:    If there are a number of causes of the loss claimed, does the claim fail even if the contravention was a “substantial contributing causal factor” or can the Court award a lesser sum by reference to the contributions of the various causes?

46    The Referee’s answer was essentially that the claim would fail because if “the Applicant is unable to establish the extent to which the contravention itself shaped the quantum of the loss claimed, then it seems that the onus has not been discharged”. With reference to my answer to Question 1 as to the Referee’s approach to causation, any language of “substantial cause” or “operative cause” is to be eschewed when considering statutory compensation in this context. The only words to be applied are the statutory ones – “because of”. And by reference to my response to Question 2, the Court in its discretion under s 545 is empowered to award a lesser sum by reference to what the claimants can prove was caused by the contravention.

C.3    The “colouring” of the Referee’s Report

47    As I indicated above, the Referee’s “Questions” are useful as they demonstrate how he has contemplated his task and how it relates to the work to be done by the Court. For reasons I have already explained, the line was blurred between the task of the Court and the specific questions put to the Referee for resolution, in this case the line between factual and legal causation. I mean this with no disrespect to the Referee. I thought it was clear, given the nature of my Reference Judgment, but perhaps in future in matters such as this it may be useful for there to be a case management hearing where a non-subject matter referee is apprised directly by the Judge of the precise nature of the task the referee is being asked to undertake.

48    In any event, only a few examples are necessary to illustrate the point as to factual causation. In response to the second question in Claim A of the Patricks Reference, relating to Additional Rail Loop trucks, the following question and answer appears:

Question: If yes, were additional rail loop trucks engaged because of the Ban and/or the General Stoppage of Work?

Answer: It is not possible to say that the extra rail loop trucks that were in fact engaged occurred because of the Ban and/or the General Stoppage work in the sense of being the only likely cause of the need to engage those extra trucks. There were other factors operative during the whole of this period and, the undefinable level of contribution of the Contravening Conduct to the need for such trucks would have declined with the effluxion of time.

49    In relation to the Qube Reference, the second question in Claim A, being a claim for the costs of third party contractors, is a like example. The Referee references other factors as causally contributing to Qube’s asserted loss:

Question: If yes, were the third party transport companies engaged because of the Ban and/or the General Stoppage of Work?

Answer: Yes, but it is a qualified Yes given Qube’s regular use of third party contractors, the potential impact of the Business Operation Factors and the impact of the Other Factors in this period and in light of the increasing remoteness between the Contravening Conduct that ended on 4 May 2017 and the time at which much of the work by the third party contractors was undertaken.

50    As can be seen, both examples are illustrative of the Referee’s importing of a “sole cause” or “substantial cause” test. The references in these excerpts to “Business Operation Factors” and “Other Factors” are but a few instances of a large number in the Report.

51    The Referee also addressed questions of mitigation in the Report, for example in the section titled “(7) A Lack of Evidence as to Mitigation Efforts”. In a vacuum, such a discussion of mitigation could be considered helpful to the Court in its eventual assessment of legal causation but, obviously enough, mitigation does not relate to the issue of factual causation or quantification. Discussion of mitigation has carried through to the Referee’s determination of quantification of loss in Claim B of the Qube Reference as follows (at [333]–[335] of the Report):

333.    Qube was not given the use of interstate drivers and available trucks for free, by related entities. If they had been provided for free, then a decision to use interstate trucks and drivers, rather than hiring them locally, could be more readily accepted as a reasonable step to take by way of mitigation.

334.    There is no evidence about why local options were not utilised and, in the absence of evidence to the contrary, I infer that using local trucks and drivers would have been more expeditious and a cheaper course to have adopted and that there was a failure to reasonably explore this option.

335.    However, it is not part of my function to deal with the issue of whether any discount or allowance should be made to any costs that have been established, to ensure that any compensation order is no more than an appropriate sum.

52    There is no need to go into other examples but, regrettably, the process miscarried and although I did consider whether there could be efforts to save some matters which related directly to factual causation, the nature of the inquiry undertaken was skewed by the approach taken as to identifying a sole cause and such a course is not open.

D     WHERE DO WE GO FROM HERE?

53    As noted above, the Referee’s Report must be rejected in whole. The question then arises as to whether it is appropriate to proceed to order a supplementary report with guidance as to the precise task I was asking the Referee to perform. On balance, I have decided that this is not an appropriate approach. The resolution of this claim for statutory compensation has been significantly delayed, not only by reason of the pressure of other work in my docket, but also, more significantly, by the relatively leisurely approach taken by the parties as to putting on material relating to the claim for statutory compensation.

54    In all the circumstances, what I propose to do after delivery of this judgment is ascertain when the parties will be in a position to have a final determination of the issue of statutory compensation.

E    THE COST OF THE REFERENCE AND THE REFEREE’S REPORT

55    I initially made an order on 12 August 2020 that the parties be “jointly and severally liable to the Referee for the fees payable to him” in respect of the Reference and Report. Qube seeks an order that the costs of the Reference and Report be reviewed or assessed and that Qube only be liable for 25 per cent of the total amount of those costs. Patricks seeks the same orders. Presumably, that would mean the Respondents would be liable for 50 per cent of the total cost of the Reference. The 25 per cent figure is arrived at because the Report relates to two separate proceedings and, so the submission of Patricks goes, the fees should be split evenly between the two proceedings.

56    There are really two questions: the first is what amount should be paid; the second is what proportion should be paid by each of the parties. As to the first question, the submission was made by counsel for the respondent that the Court is prevented from making any order as to the costs of the Reference because to do so would fail to have regard to s 570 of the FWA. This submission cannot, in my view, be correct. Section 570 provides that a party in relevant proceedings “may be ordered by the court to pay costs incurred by another party to the proceedings” only in defined circumstances which are well known.

57    I am not making an order that the respondents pay costs incurred by another party. The order that I am making is that they pay expenses incurred by a non-party to the proceedings, being someone appointed pursuant to the order of the Court to perform work.

58    As to the second point, the Reference involved three separate interests although it spanned two proceedings. There may be some argument as to the effect of order 12 made on 12 August 2020, given that it was made in two separate proceedings. On a literal view it may indeed have the effect that Qube and Patricks would only be liable for 25 per cent of the total amount of those costs. I can see some merit in that argument as a matter of pure construction, but it certainly does not, in my view, reflect the overall justice of the case. I think the appropriate course is that, subject to further order, all of the parties involved in the Reference, that is, Patricks, Qube and the respondent parties, each pay one-third of the costs of the reference. It is perhaps somewhat unfortunate to use the word “parties” in this context because there are, for example, in the Qube proceeding two applicants and three respondents. The intention of the order is that the Qube parties and the Patricks parties and the Union each pay one-third of the costs.

59    In relation to the amount to be paid, given the quantum incurred in relation to the Reference, it seems to me the appropriate course is that there be payment of one-half of the amount provided to the parties by the Referee. This is not as a consequence of the rejection of the Report per se, but rather it seems to me to represent a figure that ought to be properly recoverable given the nature of the work that was undertaken. Needless to say, such an order affects the rights of a third party, and therefore, I will grant leave for the Referee to seek any variation of such an order, but my preliminary view is this is fair in all the circumstances of the case.

F    CONCLUSIONS AND ORDERS

60    Accordingly, I make the following orders:

(1)    Pursuant to s 54A(3)(c) of the Federal Court of Australia Act 1976 (Cth), the Referee Report be rejected.

(2)    Subject to further order, all of the parties involved in the Reference, that is, Patricks, Qube and the respondent parties, each pay one-third of the costs of the Reference, which is to be one-half of the amount invoiced by the Referee.

(3)    Payment in accordance with Order 2 is to occur within 28 days of the date of these orders.

(4)    The Referee has leave to apply for a variation of Order 2.

(5)    The proceedings be set down for a final hearing commencing at 10.15am on 30 August 2021.

(6)    The proceedings be listed for a case management hearing at 9.30am on 20 April 2021.

Associate:

Dated:    13 April 2021